Urban Float Sensory Deprivation Therapy
DEAL
EPISODE SUMMARY
🕓 Air Date: March 17, 2019
Asking For:
$500,000 for 5%
Investor:
Matt Higgins
Deal:
$500,000 for 12,50%
PRODUCT SUMMARY
Urban Float offers a sensory-controlled floatation spa experience, providing relaxation and therapeutic benefits through weightless hydrotherapy.
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Background Story
Urban Float, a relaxation-focused business based in Seattle, Washington, was founded by Scott Swerland and Joe Beaudry. The duo sought $500,000 for a 5% equity stake in their company on “Shark Tank.” Scott and Joe bring a wealth of experience and passion to the world of hydrotherapy and wellness. Scott Swerland, one of the founders, has a background deeply rooted in the health and wellness industry. His expertise and dedication to creating a unique and effective relaxation experience have been pivotal in shaping Urban Float. Joe Beaudry, the other half of the entrepreneurial team, complements Scott’s vision with his skills and commitment.
The inspiration for Urban Float emerged from the founders’ recognition of the increasing popularity of floating as a form of hydrotherapy. The product is designed to serve as an escape pod from the stresses and anxieties of daily life, providing users with better focus, faster recovery, and reduced physical pain. The founders identified a growing trend in the wellness sector, particularly in the appeal of floating experiences. The business is strategically located in Seattle, where they have not only established four corporate stores but also opened the largest float center in the United States in downtown Seattle.
Over the course of five years, the founders dedicated themselves to perfecting the Urban Float experience. Additionally, they ventured into franchising, expanding their reach and success. The founders’ commitment to the trend of floating as a therapeutic practice, coupled with their business acumen, has positioned Urban Float as a leader in the field. The success of their flagship center in Seattle and the positive response from customers fueled their desire to share the benefits of floating with a broader audience, leading them to seek investment on “Shark Tank.”
The Product
Urban Float offers a unique and immersive relaxation experience through sensory-controlled floatation pods, designed to enhance mental and physical well-being. Users step into these pods filled with 200 gallons of water saturated with 1,200 pounds of Epsom salt, providing buoyancy for a weightless experience. The calming effects of this weightless hydrotherapy are aimed at reducing stress, improving focus, promoting faster recovery, and alleviating physical pain.
The floatation experience is customizable, with options for music and lighting to enhance relaxation. Urban Float has positioned itself as a high-end, spa-like environment, distinguishing it from older, less aesthetically appealing float tanks.
To access this rejuvenating experience, customers can visit one of Urban Float’s high-end spas. The company offers various options for individuals to enjoy the benefits, including a single float session priced at $45, providing an opportunity for newcomers to try the experience. Recognizing the need for regular floating to maximize benefits, Urban Float encourages customers to invest time in the practice, offering an unlimited monthly membership at $150.
The product’s appeal lies in its therapeutic benefits, making everyday activities more manageable and enjoyable after a session. The founders emphasize the cleanliness of the water, passing through a filtration system multiple times, ensuring it is cleaner than tap water. Urban Float’s commitment to providing a premium experience, combined with the proven benefits of sensory-controlled floating, positions their product as a valuable investment in mental and physical well-being.
How It Went
The company’s position before Shark Tank
Urban Float has exhibited robust performance, solidifying its position as a leader in the relaxation and wellness industry. The company’s health is reflected in its strategic expansion and financial stability. With four corporate stores, including the largest float center in downtown Seattle, Urban Float has successfully established itself as a high-end provider of sensory-controlled floatation experiences.
The company has attracted strategic partners and franchisees, expanding its reach beyond corporate-owned locations. Partnerships with individuals interested in franchising the Urban Float concept have contributed to the brand’s growth. Additionally, the company has registered in every state, indicating a commitment to nationwide expansion. Urban Float’s customer base primarily consists of individuals seeking a premium relaxation experience. The trend of sensory-controlled floating is gaining popularity, attracting customers looking for improved focus, faster recovery, and reduced physical pain. Athletes, in particular, find value in floatation therapy for recovery.
Funding for Urban Float initially came from a bootstrap approach, with $300,000 raised from friends and family for their first store. Subsequent expansion, including the opening of additional stores and the franchising initiative, has been fueled by profits generated by the company. The founders have reinvested approximately $1 million from these profits to fund the growth of Urban Float. Profits and losses indicate a positive financial trajectory, with the company being on track to generate $2.5 million in revenue. The emphasis on cash flow, with approximately $600,000 available, demonstrates financial health. The current company structure involves a combination of corporate-owned stores and franchised locations, showcasing a diversified and scalable business model.
The Negotiations:
The negotiations for Urban Float on “Shark Tank” unfolded as an intriguing dance between the founders, Scott Swerland and Joe Beaudry, and the Sharks. The initial pitch sought $500,000 for a 5% equity stake in the company. Kevin O’Leary entered the scene with an offer of $100,000 in equity and $400,000 in debt at 9.5%, a traditional structure for an investment deal. Concurrently, Matt Higgins expressed interest, offering the same $500,000 for a 15% equity stake but with a different structure. As the negotiation progressed, Kevin’s offer leaned heavily on debt financing, raising concerns among the founders about the potential risks associated with the significant debt burden.
Matt, on the other hand, brought his expertise and potential synergies, particularly in scaling the business through partnerships with sports teams, adding significant value beyond just capital. Mark Cuban bowed out early, expressing skepticism about the long-term viability of trends like floating. Lori Greiner and John also opted out due to concerns about the substantial debt and perceived lack of proprietary elements. A pivotal moment emerged when Matt Higgins made a compelling case for his offer, emphasizing his ability to help Urban Float gain traction among sports teams and accelerate their growth. In the end, the founders chose to strike a deal with Matt Higgins: $500,000 for a 12.5% equity stake.
This negotiation not only secured necessary capital for Urban Float’s expansion but also brought strategic value through Matt’s industry connections and expertise. The negotiation showcased the delicate balance between equity and debt financing and highlighted the importance of securing a deal that not only provides capital but also aligns with the founders’ vision for the future of Urban Float. Ultimately, the founders’ willingness to negotiate and Matt’s strategic offer culminated in a successful partnership that positioned Urban Float for continued success and growth in the wellness market.
